Outsourcing

Outsourcing can be defined as a contract service agreement in which an organisation hires out all or part of its IT responsibilities to an external company.

More and more companies are leaning towards outsourcing it could be said that this may be caused by the growing complexity of IT and the changing business needs of an organisation. As a result, an organisation may find that it is not possible to have all its IT services supplied from within its own company. Given this, an IT manager may decide to choose to seek assistance from an external contractor/company to supply their services the organisation lacks. In addition, the business competition has set the pace for an organisation to continue to strive for internal efficiency. It also needs to look for a way to transfer non-core activities or "in house" services and support activities to external specialist organisations who can deliver quality services at a lower cost.

IT managers can go through lengthy procedures to minimise problems with outsourcing, but still things can go wrong and intended objectives may not get achieved. To overcome such mistakes, it may be prudent to look at other companies that have undertaken outsourcing and learn from their successes and mistakes

Listed below are some of the major issues to be considered when using outsourcing:

· An IT manager that undertakes outsourcing must be able to clearly identify its long term IT strategic directions and long term information needs.

· Organisation must be able to clearly define its business objectives.

· To avoid unnecessary friction between the organisation and the external service provider, it would be prudent to incorporate an "extraordinary events" clause into any contract entered into. This clause should cover any extraordinary changes in circumstance that should occur . This also allows a lot of flexibility between the two parties.

· The IT manager should identify all the external and internal stakeholders and the impact that the outsourcing may have on stakeholders.

· Learn from other companies, use their mistakes and successes to avoid duplication and waste of manpower.

In order to determine the optimum sourcing strategy, an organisation needs to look at a number of perspectives or alternatives and then balance these perspectives with the benefits and risks of outsourcing. With this information, an organisation can derive a more structured methodology for a balanced view of the IT infrastructure and its components.

Outsourcing should not be viewed as a solution in resolving problem service areas within the organisations. If an internal service area is not performing effectively and by transferring it to an external contractor could only magnify the problem. Therefore, it is important that an organisation that undertakes outsourcing must be able to clearly identify its long term IT strategic directions and long term information needs. The IT manager is the prime candidate to fulfill this role . Once the organisations have understood and addressed its long term IT strategic directions, it can then go on to decide which IT service areas should be outsourced. Organisations undertake outsourcing of their IT service areas should do so based on the basis of costs and benefits analysis and it is justified on cost effectiveness and must be based on sound business decision.